The dollar slipped further on Wednesday, while the euro extended gains that strengthened after the European Central Bank turned hawkish last week. Investors are awaiting the release of the key U.S. consumer price index (CPI) on Thursday. The dollar weakened against nearly all G-10 currencies; meanwhile, U.S. Treasury yields slipped and stocks rose ahead of Thursday's U.S. inflation report. Risk-sensitive currencies outperformed other G-10 currencies, with commodity indexes rising. The U.S. dollar index fell 0.08% to 95.54, while the benchmark 10-year U.S. Treasury yield fell 3 basis points to 1.93%; if data showed U.S. consumer prices rose further in January, yields could resume their uptrend. CPI data could provide fresh clues on the pace of the Fed's monetary tightening, and investors are bracing for a higher-than-expected data that, if true, could mean more aggressive rate hikes by the central bank.

EUR/USD rose 0.09% to 1.1425, benefiting from higher European stock and bond prices; support at 1.1400 was unscathed but failed to break the previous day's high of 1.1449. EUR/SEK fell 0.3% to 10.4105 ahead of the Riksbank meeting on Thursday. Last week, European Central Bank President Christine Lagarde said for the first time that a tightening of monetary policy was possible this year, catching investors off guard, who revised their expectations for a rate hike by the European Central Bank. But Lagarde said on Monday that there was no need to tighten policy sharply, in an attempt to temper investor expectations of hawkish central bank action. But a major shift in expectations for central bank policy over the past week, especially for the European Central Bank, has capped the dollar's recent gains.

Marc Chandler, chief market strategist at Bannockburn Global Forex, said: "While the market is waiting for clarity, the dollar and euro are still consolidating in yesterday's range. I think the bottom line for the ECB and the Fed is that there is a lot of uncertainty, so they want to keep the maximum. limited flexibility.

Sterling was down 0.06% at $1.3535, with BoE chief economist Huw Pill dousing expectations that the central bank would soon start selling gilts once interest rates hit 1%.

USD/CAD rose 0.3% to 1.2670, extending gains as Bank of Canada Governor Tiff Macklem said it was possible to raise interest rates above neutral to control inflation.

The Australian dollar was higher on the back of higher metal prices; AUD/USD rose as much as 0.7% to 0.7195, breaking above the 55-day moving average currently at 0.7184.

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